Could you feel more secure than in a hostal (small, reasonably priced hotel) above the Red Cross office? This new entry to Otavalo is clean, compact and friendly. Smooth cedar floors can be a bit slippery, but guests love the comfy beds and warm showers. The kitchen and common area make this one a winner, but book early – there are only five rooms.
Note that Andariego has another location on Roca near Juan Montalvo, which is not as cozy as the Calle Bolivar site, but offers a few perks like televisions and private bathrooms for just a few dollars more. It also seems to have stolen their logo directly from regional Coca Cola signage, but who's paying attention?